Managing Engineering and Technology 6th Edition by Lucy Morse,Daniel Babcock

Exercise 2

Your company has two alternative opportunities, each requiring your entire capital investment budget of $325,000. Alternative A will return $390,000 at the end of one year; alternative B will return $216,000 at the end of each of the first two years. Which (if either) alternative should you recommend on the basis of (a) simple payback time? (b) net present worth?